Employment Data - In May, non-farm employment increased by 139,000, exceeding market expectations of 126,000, despite a downward revision of 95,000 in the previous two months[5] - The unemployment rate slightly rose to 4.24% in April, up from 4.19% in March, marking a near three-year high[5] - The labor force participation rate decreased from 62.6% to 62.4%[5] Federal Reserve Outlook - The probability of a rate cut in July dropped significantly to 16.7% following the employment data release[1] - The Federal Reserve is expected to maintain interest rates steady in June and July, with potential cuts in September and either November or December[2] - Market expectations for policy rates have shifted closer to the Federal Reserve's stance rather than the White House's position[2] Sector Performance - Service sector employment rose from 132,000 to 145,000, indicating resilience in this area, while goods-producing jobs fell from an increase of 11,000 to a decrease of 5,000[5] - Average hourly earnings saw a month-on-month increase of 0.42%, maintaining a year-on-year growth rate of 3.9%[5] - Job openings to unemployed persons ratio remains at 1, below the 2019 level, indicating a balanced labor market[5]

Overall Economic Activity - Economic activity in the U.S. is generally experiencing a slight to moderate decline, with half of the regions reporting a downturn, while three regions are stable and three show slight growth [2][3] - Manufacturing activity is broadly contracting, and consumer spending is mixed, with retail and dining sectors showing weakness, although some categories like automobiles are seeing increased demand due to tariff expectations [2][3] - The housing market is sluggish, with new home construction slowing down and existing home sales remaining flat, while inventory pressures are rising [2][3] Labor Market - Employment conditions are relatively stable, with most regions reporting flat employment rates, although some sectors like manufacturing and construction are seeing layoffs or hiring freezes [4] - Wage growth is moderate, with over 70% of businesses adopting a cautious approach to future hiring, and many have prepared for potential layoffs [4][11] - Job openings have unexpectedly increased, but the number of voluntary resignations has dropped significantly, indicating weakened confidence in the job market [11][12] Inflation and Pricing - Prices have been rising at a moderate pace, with tariffs exerting upward pressure on costs and prices, leading manufacturers to raise prices or reduce profits [5][6] - The real estate market remains stable, but new construction activities are either flat or slowing down due to uncertainty and high costs [6] - Service industries are facing limitations in pricing power, with some businesses delaying price adjustments to maintain demand [5][6] Regional Economic Highlights - Boston reports slight declines in consumption and housing prices, with businesses delaying hiring due to tariffs [7] - Atlanta sees growth in the energy sector, particularly LNG exports, while manufacturing is noticeably declining [8] - San Francisco's technology and financial services remain stable, but retail is shrinking, and the agricultural and real estate markets are softening [9] Policy and Economic Outlook - The intertwining of tariff disputes and interest rate cut expectations is creating a dual challenge for the U.S. economy, with markets anticipating at least two rate cuts within the year [14][15] - Recent data has led to increased speculation about the Federal Reserve's potential rate cuts, with a significant probability now assigned to cuts occurring in September or earlier [14] - The uncertainty surrounding tariffs and geopolitical risks continues to weigh on economic outlooks, with many regions maintaining a cautious stance [9][10]

Core Viewpoint - The ISM reported a decline in the US non-manufacturing PMI to 49.9, marking the lowest level since June 2024, indicating a contraction in the service sector [1][3] Group 1: Economic Indicators - The new orders index plummeted by 5.9 points to 46.4, the largest drop in nearly a year [3] - The business activity index fell by 3.7 points to 50, the lowest in five years [3] - The payment prices index surged to 68.7, the highest since November 2022 [3] Group 2: Sector Performance - The accommodation and food services sector was one of the few growth highlights, while eight other service sectors, including retail, construction, and transportation, experienced contraction [3] - Backlogs of orders decreased to the lowest level since August 2023 [3] Group 3: Employment and Supply Chain - The employment index increased by 1.7 points to 50.7, indicating nearly stagnant hiring [3][6] - The supplier delivery index rose, suggesting longer delivery times as companies adjust their supply chains [5] Group 4: Trade and Policy Impact - Both the export and import indices showed contraction, reflecting the impact of fluctuating trade policies from the Trump administration [4]

Group 1 - The April non-farm payroll report in the U.S. shows a mixed labor market picture, with 177,000 jobs added, exceeding the expected 130,000, but with a downward revision of 58,000 jobs in the previous two months [1] - The unemployment rate remains steady at 4.2%, while the annual wage growth is at 3.8%, which is below expectations [1] - The healthcare (+64,000), transportation and warehousing (+29,000), and financial activities (+15,000) sectors are the main contributors to job growth, while manufacturing continues to lose jobs [1] Group 2 - Average hourly earnings increased by 0.2% month-over-month, which is below the expected 0.3%, but the year-over-year growth of 3.8% outpaces the current inflation rate of 3.5%, indicating real income growth [2] - The Federal Reserve is expected to maintain interest rates in May, but traders have adjusted expectations for four rate cuts within the year [2] - The labor force participation rate slightly increased to 62.6%, with the participation rate for the core working age group (25-54 years) reaching a seven-month high, indicating more potential workers returning to the market [2]

Core Viewpoint - The April non-farm payroll data indicates a slight decline in employment growth, with potential implications for the overall labor market stability and economic outlook [1][3][17]. Group 1: Employment Data - In April, the non-farm employment increased by 177,000, showing a slight decrease compared to the previous month [3]. - The combined downward revision of 58,000 jobs for February and March suggests a cooling trend in the job market [3]. - The three-month moving average of non-farm employment indicates a downward trend, pointing to a continued softening in the employment market [3]. Group 2: Sector Performance - Job growth in April was primarily concentrated in the education and healthcare sectors (70,000), transportation and warehousing (29,000), and leisure and hospitality (24,000) [5]. - Retail and leisure hotel sectors experienced the most significant declines, with reductions of 24,000 and 14,000 jobs, respectively [5]. Group 3: Unemployment Rate - The unemployment rate remained stable at 4.2% in April, with a slight increase in the labor force participation rate by 0.1 percentage points [7]. - The U6 unemployment rate decreased by 0.1 percentage points to 7.8%, indicating a stable employment market [7]. Group 4: Labor Market Dynamics - The number of job vacancies decreased to 7.19 million in March, with a vacancy rate of 4.3%, the lowest in nearly six months [9]. - The labor supply-demand gap recorded 110,000, indicating a return to pre-pandemic levels and suggesting a balance in the labor market [9]. Group 5: Wage Growth - Average hourly earnings growth in April showed a slight month-over-month decrease to 0.2%, while year-over-year growth remained steady at 3.8% [10]. - The highest year-over-year wage growth was observed in the retail and business services sectors, at 4.5% and 4.4%, respectively [12]. - Real wage growth, adjusted for inflation, increased to 1.4% in March, reflecting a steady increase in wage income [15]. Group 6: Economic Outlook - Following the release of the non-farm data, market expectations for Federal Reserve interest rate cuts have been slightly adjusted to 3.5 times for the year, indicating a moderation in economic risk concerns [17]. - Despite the stable employment data, the impact of government layoffs and ongoing economic policy uncertainties may continue to dampen hiring prospects [17].

Group 1 - The latest non-farm payroll report indicates that the U.S. added 177,000 jobs in April, exceeding the expected 130,000 [1] - The unemployment rate remained steady at 4.2%, aligning with market expectations [1] - Average hourly wage growth year-over-year was recorded at 3.8%, slightly below the expected 3.9% [1] Group 2 - The revisions for February and March non-farm employment numbers showed a downward adjustment of 58,000 jobs combined [1] - The healthcare, transportation and warehousing, financial activities, and social assistance sectors continued to see job growth [3] - The construction sector added 11,000 jobs, which was anticipated due to expected spring activity [3] Group 3 - The transportation and warehousing sector added 29,000 jobs, potentially indicating an increase in tariffs [3] - Average hourly wage growth was slightly below expectations at 0.2%, compared to the anticipated 0.3% [3] - Year-over-year wage growth of 3.8% outpaced consumer price inflation, leading to real income growth [3]